Ukie guide - IP in China

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Intellectual Property in China 06l2014


About Ukie The Association for United Kingdom Interactive Entertainment or Ukie (pronounced YOU-KEY) is a trade body that aims to support, grow and promote the whole of the UK’s games and interactive entertainment industry. Founded in 2010 (although formerly known as ELSPA), Ukie’s membership includes all the major UK and global games publishers and the best of UK development talent - from promising start-ups to some of the biggest, most successful studios operating in the UK today. We also have distributors, academic institutions, new publishers, and media outlets that are integral to the lifeblood of the industry as part of the family.

About Rouse Rouse has been operating in China since 1993 and has offices in Beijing, Shanghai and Guangzhou on the mainland as well as Hong Kong. The guide gives a very brief overview of some of the highly complex and procedural issues surrounding IP law in China. It is not a substitute to obtaining individually tailored legal advice. Our top tips are in many ways the tip of the ice berg and each business has slightly different issues and approaches. If you are interested in finding out more, please get in touch with Arty Rajendra or Rosie Burbidge of Rouse’s London office or Tim Smith in Beijing.

Ukie works with government to champion a range of issues including age ratings, education and skills, access to finance and protecting intellectual property rights. It also works with the media to ensure true and accurate representation of the sector by raising awareness of the industry’s positive economic contribution and the societal benefits of gaming to policy makers, regulators and consumers. One of Ukie’s key roles is to support its members by providing them with key market information, promoting careers and offering the business support services, training and best-practice knowledge to enable them to operate most effectively. We also offer a comprehensive events programme to give the games industry access to key information, leading industry figures and give everyone the chance to network. You can see our events programme here ukie.org.uk/events In addition, Ukie compiles weekly, monthly and annual retail charts and sales reports for the UK market.

ukie.org.uk rouse.com @uk_ie Ukie on facebook Ukie on linkedIn ukie.org.uk

Ukie 21-27 Lamb’s Conduit Street London WC1N 3NL 0207 534 0580


guide - intellectual property in China

contents 04 Overview 04 An even quicker gudie 05 Trade marks 08 Copyright 09 Patents 10 And finally... 11 Useful contact details


guide - intellectual property in China 02

China is a new and largely untapped potential gamers. It offers a huge o However, operating successfully in C and in some cases registration, of k

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d marketplace with over a billion opportunity to Ukie members. China depends on early analysis, key intellectual property (IP) rights.

ef that the Chinese IP system does s is not the case. Between 2006 claims brought in China by local tainment industry (a broad category % of these cases resulted in a .e. an injunction to restrain further mages).

d IP system with very similar and the US. The administration of that straightforward but over the general trend toward improved e respect for IP rights.


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Overview There are three main IP rights to be aware of in China: trade marks, copyright and patents. This guide provides a very general introduction to each of these rights as well as touching on issues like licensing and domain names.

An even quicker quick guide 1.

It is quicker, cheaper and easier to register and enforce IP rights in China than is generally believed.

2.

It is much cheaper to register core Chinese IP rights before entering the Chinese market. If you do not, there is a substantial risk that your rights will be registered by a parasitic third party. This means starting expensive recovery proceedings in order to use your rights in China.

3.

China is reaching the final phase of a comprehensive review of its IP legislation. This is part of a broader move towards a more rightsholder friendly system.


Trade marks The purpose of a trade mark is to enable consumers to recognise the origin of a product or service and distinguish it from competitor products or services. A trade mark is registered in relation to one or more ‘class’ of goods and services; there are 45 classes. The most relevant for Ukie members are class 28, ‘games and playthings’, and class 41, ‘entertainment’. A trade mark registration gives you a monopoly right. However, this does not mean that you ‘own’ the word or logo; it simply provides a right to prevent third parties using your trade mark (or one which is confusingly similar) for the same (or similar) goods and services.

‘non-use’. Qualifying ‘use’ can include making an app available on the Chinese version of the various app marketplaces. The important thing is that any use of the trade mark must be targeted at Chinese consumers (i.e. the advertisement and sale terms should be in Chinese and the product or service should accept payment in Chinese currency RMB). ++

It is advisable to register both your company name and core brands as word and logo marks in China. Even if you do not trade with consumers under your company name, it can cause significant difficulties to have a Chinese third party operating under your company name.

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A trade mark registration in mainland China does not give you registered trade mark rights in Hong Kong, Macau or Taiwan.

Rouse Insight ++

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Registering a ‘simple’ word mark is not that straightforward where you have three different writing systems: latin alphabet, hanzi (i.e. Chinese characters), and pinyin (i.e. alphabetised hanzi). It can be very difficult to translate a trade mark so it is important to think carefully about the intended use and how Chinese consumers would refer to your brands. China is a ‘first to file’ country when it comes to trade marks, meaning it is very important to apply to register a mark as soon as you even think about using it in China. If the trade mark is not used, it can be revoked (by the Chinese authorities or a third party) on the basis of


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Bad Faith registrations One of the biggest complaints of US and European companies trying to enter the Chinese market is that their trade mark has already been registered by a Chinese company. These trade mark squatters are third parties who register other business’ trade marks in order to sell them back for a high price. Even worse, they sometimes create a copycat business or product under the Chinese trade mark and enforce their ‘rights’ against the original trade mark owner (and their business partners). This can stymie entry to the Chinese market, the ability to manufacture goods in China or the ability to enforce your rights. Bad faith registrations are so common that legislation has recently been introduced to make the recovery of these ‘bad faith’ registrations easier. Although the new legislation may eventually make this problem more manageable, prevention by early registration of your rights is still the most cost effective and low risk method. How to register You can register a trade mark either directly via the Chinese Trade Mark Office (‘Chinese TMO’) or via the World Intellectual Property Office (‘WIPO’). The right procedure depends on your business strategy. The Chinese TMO has recently changed to a simpler procedure with stricter time limits; in most cases it should now be quicker and cheaper than the WIPO process.

Very broadly speaking, a straightforward trade mark application via the Chinese TMO costs between £1,000 to £2,000 per trade mark, whereas a straightforward application via WIPO generally costs slightly less, around £1,000. However, using the WIPO system to register a Chinese trade mark can be complex, as the Chinese TMO has adopted its own sub classification system for goods and service which is not always in line with the WIPO system. Therefore any initial cost savings using WIPO can be short lived if complications arise. Both procedures usually take about 18 months from application to registration. Advice on trade mark selection and pre-application searches incur additional but not prohibitive costs. Like all trade marks, Chinese trade marks can last indefinitely provided that you keep using the trade mark in China and pay renewal fees.


Top Tips 1.

Learn from others mistakes. Many companies who think about their trade marks too late have had to spend a lot of money either buying registered marks from squatters or trying to recover their brand through legal proceedings.

2.

Think about your Chinese brand. Take time and conduct market research to decide how to translate your brand into China. Look at how your brand is actually used: the meaning, sound and translation. Don’t just use internet translation tools.

3.

Carefully consider all licences. If you are licensing your brand into China or manufacturing any products there, don’t just use a standard template. Think about what will happen to your Chinese rights if the relationship fails.

4.

Chinese law. Ensure that all agreements are under Chinese law (e.g. with Chinese suppliers, customers or licensees). It is very difficult to enforce foreign judgments in China.

5.

Domain names. It recently became possible to register a Chinese language domain name (it is still possible to register a latin alphabet .cn domain name). Having a Chinese language domain name may be a good way to differentiate your business in the Chinese market.

6.

Track your Chinese audience. The minute you think about moving into the Chinese market or gain an international audience, file your trade mark application. Even if not specifically targeting China, consider using your analytics software to track Chinese engagement and once it reaches an agreed threshold – file a trade mark.

7.

Keep track of your data. Once registered, it is important that you use your trade mark in China and keep records of all such use. This helps ensure you can recover your trade marks if registered in bad faith and ensures you can keep your trade mark if somebody tries to revoke it for non-use.


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Copyright Since 1992, the law in China has seen many changes to bring it into line with the rest of the world. Because copyright is subject to so many international conventions, it does not tend to vary significantly between jurisdictions. As in Europe and the US, copyright exists in, amongst other things, game artwork, in-game text, background music, recordings of music and voices, cut scenes, underlying software etc. The two big differences in China are the possibility of ‘recording’ these rights (a similar system operates in the US but not in Europe) and the duration. Copyright recordals Although copyright is an automatic right and does not require registration, it is possible to record your copyright with an administrative body. This helps to prove evidence of your rights and helps to speed up and reduce the costs of enforcement. It costs around £600 per work to file a simple copyright recordal. Duration Regardless of whether it is recorded, most Chinese copyright lasts for the life of the author plus 50 years. Copyright in ‘lesser’ rights such as film, sound recordings and broadcasts lasts for 50 years from publication which would include any making available online.

registering key copyright works with the Chinese copyright office. ++

Who owns the copyright? Usually the creator of a work is the first owner of the copyright but, in Europe, if you are an employee, your employer is the first owner. In China, the employee is automatically the first owner so be careful to include an assignment of all works created in the course of employment in any employment or commissioning contracts. Licensing or assigning rights Any exclusive licences or assignment of Chinese rights must be in writing. It is possible to register these agreements with an administrative body in China. This helps to keep a clear record of who owns and is licensed to use which rights. Top Tips 1.

File a copyright recordal for your key copyright works. It doesn’t cost much and can avoid expensive problems later on.

2.

Get your agreements in writing! It is always best to define your position in China. This is particularly relevant for sales and licensing agreements of copyright and employment or commissioning contracts.

Rouse Insight ++

Registration. You do not have to register copyright for it to exist in China but it is sensible to keep excellent records of your rights, particularly first creation of all iterations of text or artwork. Consider

Software. Potentially confidential rights such as software source code can be registered in partial form only (e.g. first few pages and last few pages) so that key code is not made available to the public but the software is recorded.


Patents Summary of rights Chinese patent law covers three types of rights which are referred to under the umbrella term of ‘patents’ in China. Inventive patents protect new products and processes (including, in some circumstances, software). When based on a prior foreign (say, UK or European) patent application, the process will take around 2 to 4 years from application being filed in China to final registration and cost between £5,000 to £10,000 (including the cost of translation into Chinese) dependent on whether the patent is based on an application in another jurisdiction or not. They offer the highest level of rights protection and last for 20 years from the filing date. Utility models protect new technical solutions relating to shape and/or structure of a product. When based on a prior foreign utility model application, the process will take 6 to 12 months from the application being filed in China to registration. They are substantially cheaper than inventive patents, about £5,000 per application (including translation costs). They last for 10 years from the filing date. Design Patents protect new designs of a product’s shape, pattern, colour or their combination that have an aesthetic appeal (e.g. a newly designed game controller). When based on a prior foreign design patent/registered design, the process will take 6 to 12 months from the application being filed in China to registration.

Should you apply for an inventive patent or a utility model? You can apply for a utility model and an inventive patent for the same product but once the inventive patent has been granted you must give up the utility model. The speed and low cost with which utility models can be granted, and the 10 year period of protection, have made them particularly attractive to many companies in the arcade industry. Like trade marks you can file a patent internationally or directly with the Chinese patent office. The route chosen depends on the type of patent you are applying for and the number of countries you wish to file in. To file a patent directly in China takes about 3 to 4 years to grant. As with trade marks, if you have patents in other territories it is possible to file a Chinese version of that patent in China via an international system. This approach can add an additional 1-2 years to the process before it is granted in China. Can GUI be protected in China? China is ahead of most countries in that it protects the interface part of a graphical user interface (GUI) both as copyright and, from 1 May 2014, as a design patent. This new right protects user interfaces displayed in graphics for computer operating environments. It includes apps and operating systems. Unfortunately, it currently does not include the interfaces of computer games or layout of webpages but this may change in the future.


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Rouse Insight ++

Given the timing to register and likely subject matter you are looking to protect, utility models may be a suitable alternative to inventive patents when protecting inventive products and apparatus in China (although utility models do not protect software).

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A patent or utility model filed in China is not valid in Hong Kong, Taiwan or Macau. Although in Hong Kong and Macau (but not Taiwan) it is a simple administrative process to register such a right when you are registering the same patent or utility model in China, at the European Patent Office or the UK.

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It may be possible to get a patent for software. However, software patentability is a complex subject. If you are interested in finding out more, seek professional advice.

on the translation. 3.

Utility models. They are powerful and underused assets. A wide variety of physical products can be protected more quickly and cheaply than an inventive patent. They are hard to revoke and are associated with similar damages awards to patents.

4.

Evidence of damage. The more data you have on your Chinese operations, the better. Without proper evidence of your losses, which are a result of someone infringing your patent, it is likely that the Chinese courts will only award you basic statutory damages.

5.

Seek advice from a firm with offices in both China and the UK who can carefully manage parallel registration and enforcement in both jurisdictions.

Top Tips 1.

2.

Drafting. It can be very difficult to amend your patent application once it has been filed and examined by the Chinese patent office. Therefore you must carefully consider the patent you are applying for and how it might be interpreted by the Chinese patent office at the drafting stage. Translation. Accuracy of the translation can have a major impact on enforcement. If possible find a bilingual lawyer to proof-read and do not cut costs

And finally‌ Late last year the Chinese government announced that it was looking into creating a specialist IP court in one or more cities around China. It has looked at systems in the US and Europe, such as the UK’s IP Enterprise Court for inspiration. Follow updates on the Rouse.com website to keep track of how the new IP court progresses.


Useful contact details ++

British Chambers of Commerce The British Chamber of Commerce in China is an independent, not-for-profit membership-based organisation providing connectivity for British business in China. www.pek.britcham.org

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British Embassy and Consulates-General UK Trade & Investment is the UK Government organisation that helps UKbased companies succeed in an increasingly global economy and supports them entering the Chinese market. Its range of expert services are tailored to the needs of individual businesses to maximise their international success. UKTI also seeks to improve the conditions for trade and investment in China through its contacts with the Chinese government. www.uk.cn/bj/index.asp

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China-Britain Business Council CBBC is the UK’s leading organisation helping British companies do business in China. It delivers a range of practical, cost-effective services to British companies wishing to export goods and services to, invest in, or establish manufacturing under licence arrangements with China. www.cbbc.org

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EU China IPR Helpdesk The China IPR Helpdesk introduces European SMEs to the knowledge and business tools required to develop the value of their intellectual property rights and to manage related risks. The Helpdesk provides free information, first-line advice and training support to European SMEs to protect and enforce their IP rights (IPR) in China. The Helpdesk’s services are free and are offered in its offices by appointment, through telephone and online enquiry points; there will also be a range of practical training tools available in web-based forms and through training workshops in Europe and China. www.china-iprhelpdesk.eu

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Quality Brands Protection Committee The QBPC is comprised of more than 160 multinational companies concerned with the impact of counterfeiting and membership continues to grow. QBPC member companies represent more than US$70 billion investment in China, with hundreds of thousands of employment opportunities directly or indirectly created in China. www.qbpc.org.cn




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